Amid a slew of announcements from U.S. airlines about cuts in service and staff, Qantas Airways said it plans to increase its domestic capacity by 50%.

The move is Qantas's first major effort to fortify its newly dominant position in the Australian airline market. The company became the country's only national carrier with the shutdown of long-time rival Ansett Australia last week. Qantas's plan to add and redeploy aircraft will allow...